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Gap Inc. to Close 175 Stores ➥ American Apparel Page 2 NEWSPAPER 2ND CLASS $2.99 VOLUME 71, NUMBER 26 JUNE 19–25, 2015 THE VOICE OF THE INDUSTRY FOR 70 YEARS The Gores Group Set to Sell Big Strike Clothing Company By Deborah Belgum Senior Editor Four years after acquiring a majority share in the juniors lifestyle clothing company Big Strike Inc., The Gores Group has decided to sell the decades-old company to Un- ger Fabrik. Terms of the deal, done with the advisement of Intrepid Investment Bankers, were not revealed, but sources said The Gores Group is selling Big Strike for less than it pur- chased it. Neither The Gores Group nor Unger Fabrik returned telephone calls requesting comment. The Gores Group, a Beverly Hills–based global invest- ment firm headed by Alec Gores, acquired more than 70 percent of Big Strike in 2011 for around $100 million from the company’s co-founders—Lars Vikland, Kevin Talbot and Jodi Sundberg—sources said. Immediately, Gores announced that Paula Schneider ➥ Big Strike page 3 PHOTO COURTESY OF BUCK MASON LOCAL MADE: The Buck Mason brand made a splash with its U.S.-manufactured men’s collection. A picture of Buck Mason goods being assembled is above. This fall, the brand is scheduled to open a store on Abbot Kinney. The Door Revolves Again on the American After a Pure Play E-commerce Debut, Buck Mason Opens Abbot Kinney Store Apparel Board By Deborah Belgum Senior Editor By Andrew Asch Retail Editor high-profile shopping street in Los Angeles’ Venice section. The Los Angeles–headquartered Buck Mason brand has It will take possession of the 650-square-foot space in July. More than five months after taking over as chief execu- found success in every forum that uses electricity and screens. Currently, fashion brand Freenote is running a pop-up shop tive of American Apparel, Paula Schneider now sits on the It launched two years ago by retailing its jeans and tees to at the address. clothing company’s board of directors. the creative classes on its pure-play e-commerce site (www. The Abbot Kinney space will offer a more detailed pic- On June 14, David Danziger, an auditor who had been buckmason.com). Sales have grown steadily, according to the ture of the brand compared with the low-key, 380-square-foot on the board since 2011 and was the co-chairman with label’s founders, Sasha Koehn and Erik Schnakenberg. The boutique that the label has run as a retail space at 580 Venice Allan Mayer until last December, stepped down. After Buck Mason founders jumped from computers to TV screens Blvd. The small space was modest and tucked behind a bus Danziger’s resignation, the remaining directors appointed when they appeared this year on “Shark Tank,” the ABC net- stop, Schnakenberg said. Schneider to join the board. work reality show focusing on entrepreneurs. “It was more of a showroom,” he said of the space, which Danziger’s departure comes after American Apparel But the next step for the brand is based on concrete. It will was remodeled for $895. “It was a great way for our cus- signed a letter agreement on June 7 with former employee open a Buck Mason bricks-and-mortar location. tomers to experience the physical product. … We were sur- and current stockholder Jeffrey Kolb. In the agreement, This fall, the downtown LA–headquartered brand is sched- prised at how much of our online following drove traffic to Kolb said he would withdraw two candidates he intended uled to open a boutique at 1638 Abbot Kinney Blvd., the ➥ Buck Mason page 7 to nominate to the company’s board of directors at the an- nual meeting in New York on July 16. Those two candi- dates were Gene Montesano, co-founder of Los Angeles Gap Inc. to Close 175 Stores ➥ American Apparel page 2 By Andrew Asch Retail Editor INSIDE: a Gap statement. The retailer intends to maintain a big fleet Where fashion gets down to business SM Over the years, Gap Inc. forged a reputation for building around the globe. There will be 1,600 company-operated and a location in every mall and in every neighborhood, but in a franchise locations around the world. reversal, the company known as the world’s largest specialty- Jeff Kirwan, global president for the Gap brand, also an- store chain announced a major wave of store closings. nounced on June 15 that 250 jobs will be cut at the company’s Gap Inc. will close 175 stores, mostly in North America, headquarters and offices around the country. said Art Peck, the chief executive officer, who took over the San “These decisions are very difficult, knowing they will af- Francisco–headquartered specialty giant. He said 140 stores will fect a number of our valued employees, but we are confident shutter this year. A limited number of stores will be closed in they are necessary to help create a winning future for our em- 2 8 Europe. No Gap Outlet or Gap Factory stores, both of which ployees, our customers and our shareholders,” Kirwan said. focus on major discounts and promotions, will be closed. Gap Inc. forecasts that it will lose $300 million associated Tech Notes ... p. 3 “Returning the Gap brand to growth has been the top prior- with store closures and lease buyouts, employee costs, and ity since my appointment four months ago,” Peck said. “Cus- inventory write-offs. However, it will gain annual savings of Real Estate ... p. 6 tomers are rapidly changing how they shop today, and these $25 million from the store closures starting in 2016. moves will help get Gap back to where we know it deserves The specialty giant announced a wave of store closures Findings & Trimmings ... pp. 8–11 to be in the eyes of consumers.” four years ago. In October 2011, the company planned to Findings & Trimmings Resources ... p. 13 After the current wave of store closings, Gap forecasts that reduce its fleet in North America and forecast that it would 800 Gap stores, 500 Gap Specialty stores and 300 Gap outlet reduce its “square footage” by 10 percent by the 2012 fiscal locations will serve North American shoppers, according to year. ● www.apparelnews.net 01,2,3,7.cover.indd 1 6/18/15 6:48 PM NEWS Authentic Brands Takes Over Frederick’s of Hollywood Authentic Brands Group has completed Authentic’s South America and with little competition. But then Victoria’s its acquisition of the iconic Frederick’s of chairman and L a t i n A m e r i c a . Secret came along and captured a consid- Hollywood lingerie label after Frederick’s chief executive. New products will erable chunk of Frederick’s market. In July declared bankruptcy in April and shuttered Even though include perfume 2000, Frederick’s filed for Chapter 11 bank- its 93 stores. online sales will and personal care ruptcy protection, emerging from bankrupt- The lingerie company said increased make up a good items. cy in 2002. competition from brands such as Victoria’s part of the lin- In recent years, In late 2013, the publicly traded company Secret and decreased shoppers at malls led gerie line’s rev- Frederick’s of Hol- was taken private in a deal by a consortium to its downfall. The company listed $36.5 enues, Authentic lywood had a very comprising HGI Funding LLC, a subsid- million in assets and $106 million in debt. said it hoped to seesaw existence. iary of New York hedge fund Harbinger With the bankruptcy filing, New York– expand Freder- Launched in 1946 Group Inc., and other common and pre- based Authentic Brands put in place a $22.5 ick’s products by Frederick Mel- ferred shareholders. The deal valued Freder- million offer to buy the brand and sell it on- and distribute linger, the lingerie ick’s of Hollywood at $10.6 million. line. them in depart- company started The lingerie company always had its flag- “Frederick’s of Hollywood supports our ment stores and out as a mail-order ship store on Hollywood Boulevard in Los strategic focus of diversifying the portfolio specialty stores catalog and ad- Angeles. A star in front of the store honors and strengthens ABG’s position in the inti- in North Ameri- A Hollywood Boulevard star for Frederick Mellinger vanced to a chain of Mellinger for his enterprising retail concept. mates-apparel category,” said Jamie Salter, ca, Europe, Asia, around 200 stores —Deborah Belgum FINANCE NOTES Job Growth Looks Positive in California and the U.S. With the economy still ticking along, the state’s economy should receive a boost by expects consumers to eventually start hitting Nickelsburg said California should see its unemployment rate in California and the rest burgeoning growth rates in construction, au- the stores again once they feel comfortable unemployment rate dip to 5 percent by 2017. of the country will continue to drop through tomobiles and business investment as well as with their economic outlook. He said hous- There are still a number of long-term unem- 2016, according to the latest UCLA Ander- more strength in consumer demand. ing and equipment investing will help to ployed who have been out of jobs since the son Forecast. Even though lower gasoline prices have power economic growth. devastating recession hit in 2008. Many of Traditionally, California’s unemployment not translated into large upswings in con- The one big question on the horizon is those workers were in their 50s and are now rate is slightly higher than the rest of the na- sumer spending, the economy will see a 3 will the Federal Reserve start raising interest nearing retirement and see little benefit in tion because it is the most populous state in percent boost in gross domestic product by rates? Shulman believes a slight interest rate gaining new job skills for different jobs.
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